In response to the article on car insurance we published last week, a good friend from college e-mailed me about rental car reimbursement. Here’s what she had to say:
Loved your article on “Everything You Ever Wanted to Know About Car Insurance.”
I was recently in a car accident and one thing I did not have on my insurance was “rental car reimbursement”. If I had only known…Although my car was the least damaged in the three car accident (the two cars behind me…one rear-ended the other and then hit me and pushed my car quite a distance due to the speeds they were traveling. Both the other cars were towed from the scene.)
My car is being repaired which will take 5-7 business days and, with the holidays, possibly even longer. Unfortunately, I didn’t have “rental reimbursement” insurance so my insurance company will not provide me with a rental car. I can pay out of pocket expenses and get a rental car, and then try to recoup the $ from his insurance, however, at this time the driver who caused the accident isn’t show current insurance. I’m already going to have to pay a $500 deductible if he really is uninsured.
I’m counting my blessings as no one was injured…but if only I had known how valuable the “rental car” option is and it’s only $5 a month with our plan. Another life lesson learned. 🙂
The good news is my friend wasn’t hurt. But her e-mail got me to thinking–Is rental car reimbursement insurance a good deal? It seems to me there are advantages and disadvantages to getting this extra insurance.
Advantages: The primary advantage is that it gives you some peace of mind that you won’t be unexpectedly hit with a rental car bill that could easily cost several hundred dollars. Particularly during the holidays, having to come up with several hundred dollars can be really tough. And the cost is reasonable at only about $5 per month or so, depending on your car insurance.
Disadvantage: The disadvantage is that in the long run, even $5 a month will probably cost you more than the car rental fees you’re likely to incur. Unless you have a lot of accidents (in which case your insurance costs will go up anyway), you can easily go years without ever needing to rent a car while your car is in the shop. And if you’ve saved up an emergency fund in a high yield CD or savings account, you should be able to withstand the occasional unexpected expense of renting a car.
So what’s your take? Do you have rental car reimbursement insurance and do you think it’s worth the cost?
Topics: Insurance
I’m currently going through this. When I first bought my CR-V in 2000, I had the full complement of insurance, including the rental car reimbursement. I don’t remember what it cost but let’s say it was $5/mo. When the car was about 5 years old I was rear-ended at a traffic light. The at-fault driver’s insurance paid for everything, including the rental for a week while my car was repaired. But I was so mad at the way my own insurance company abandoned me that I lowered my insurance levels by half, eliminated the rental and all extras. Ten years later I was rear-ended again, this time by a US Postal truck in much the same way as before. Yes, I’m still driving the same CR-V (it’s in great shape) and with the same insurer, who finally ponied up for repairs but not the rental I need for the week that my car is in the shop. The body shop has a deal with Enterprise and I’m getting a car for $20/day, so even though my insurance is dragging their feet agreeing to some supplemental damage, I figure it won’t cost more than $200 with tax and everything for the rental. That’s a lot better than the $600+ I would have paid over the last 10 years for the rental insurance and there would have been a bigger hassle involved, since insurance companies in general never spring into action and make things go easily for their own customers.
Thanks for sharing this advice on choosing rental car insurance! I have been wondering whether or not to get rental car insurance for a rental car I’ll be using in a few weeks. It would be really nice to not worry about what will happen in an accident, but I also don’t want to spend too much money. However, the money you save in the event that you DO get into an accident is huge!
in my situation, i had rental car insurance. i was in a small accident in my work parking lot, but the damage to my car was severe and took the auto body shop a month to fix it. my rental car expense (after insurance paid their portion) was over $900. the guy who hit me hid from my insurance company so they couldn’t get a statement and his insurnace company found me 100% at fault and my company found him 100% at fault. so…it ws going to have to go to court. but since no one was divulging his whereabouts, my insurance company told me i was out of luck. well, today (3 1/2 years later) my insurance company settled with his insurance company. not sure who they found at fault, but when i asked about being reimbursed for my rental car expense…they told me to take him to small claims court, but the statute of limitations expired 3 years after the accident…that is convenient! so because he hid for so long and it took my insurance company took so long to find him, i am now out $900+. my advice…if you have 2 cars at home and can do it, take the option that the insurance company pay you to use your other car, i think they pay $10 a day or something…it is WELL worth it and i will never do that again! oh, another sound piece of advice the lawyer gave me: if the person who hit you cannot be found, place an ad in the local newpaper that you are informing them that you are taking them to court, if you do this within the statute of limitations, it counts as them being served because it has a date on the newspaper. and this has been another addition of “things i wish i had known sooner than now!!!”
It also depends on whether you have a 2 car family and can afford the time and trouble to carpool, so to speak, or to find alternate transportation. Since insurance companies don’t offer something unless they figure they can make money on it, odds are you won’t need it. Just self-insure yourself and have an emergency fund like you’re supposed to. If it’s hard coming up with money around the holidays, perhaps you’re spending too much on your holidays.